Staking Fundamentals: Earning Rewards by Securing a Network

IMPORTANT INFORMATION:

RISK CONSIDERATIONS
Spot Crypto ETPs are exchange-based products that track the price of an asset, i.e., bitcoin, by holding the actual asset as the underlying asset.

Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.

Cryptocurrency (notably, Bitcoin) operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. It is not backed by any government. Federal, state or foreign governments may restrict the use and exchange of cryptocurrency. Cryptocurrency may experience very high volatility.

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The views and opinions and/or analysis expressed are those of the author or the investment team as of the date of preparation of this material and are subject to change at any time without notice due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date of publication. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) and its subsidiaries and affiliates (collectively the Firm”) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.

Forecasts and/or estimates provided herein are subject to change and may not actually come to pass. Information regarding expected market returns and market outlooks is based on the research, analysis and opinions of the authors or investment team. These conclusions are speculative in nature, may not come to pass and are not intended to predict the future performance of any specific strategy or product the Firm offers. Future results may differ significantly depending on factors such as changes in securities or financial markets or general economic conditions.

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RISK CONSIDERATIONS
Investing in digital assets involves risk, including possible loss of principal. An investment in Morgan Stanley Bitcoin Trust (MSBT), Morgan Stanley Ethereum Trust (MSSE) and/or Morgan Stanley Solana Trust (MSOL) (each, a “Trust” and collectively, the “Trusts”) are subject to a high degree of risk and heightened volatility. Each Trust is not suitable for any investor that cannot afford loss of the entire investment.

Each Trust has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (the “SEC”) for the offerings to which this communication relates. Before you invest, you should read the relevant prospectus and other documents such Trust has filed with the SEC for more complete information about such Trust and the related offering.

Morgan Stanley Investment Management Inc. is the Delegated Sponsor and Foreside Fund Services, LLC is the Marketing Agent for each Trust.

This information must be preceded or accompanied by a prospectus, click here (MSBT; MSSE; MSOL) to view or download the prospectus, for each Trust. You should consider a Trust’s objectives, risks, charges and expenses carefully before investing. Each Trust’s prospectus contains this and other important information about such Trust. Please read a Trust’s prospectus carefully before you invest.

These Trusts are not registered under the Investment Company Act of 1940, as amended (the “40 Act”), and are not subject to regulation under the 40 Act, unlike most mutual funds or ETFs. Each Trust may trade at a premium or discount to its net asset value. Each Trust is new and has a limited operating history upon which investors may base an evaluation of its likely performance.

The value of each Trust relates directly to the value of the underlying digital asset such Trust holds, the value of which are highly volatile and subject to fluctuations due to a number of factors.

Each Trust relies on third party service providers to perform certain functions essential to the affairs of such Trust. Some of these service providers may not be subject to federal regulation and oversight and the replacement of such service providers could pose a challenge to the safekeeping of the digital asset and to the operations of each Trust.

No guarantee or representation is made that any Trust’s investment strategy, including, without limitation, their investment objectives or strategies, will be successful, and investment results may vary substantially over time. Nothing herein is intended to imply that any Trust’s investment methodology or that investing may be considered “conservative,” “safe,” “risk free,” or “risk averse.”

This material is not an offer or solicitation of any kind to buy or sell any securities outside of the United States of America. Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.

Digital Asset Risk Disclosures
Many digital assets, including bitcoin, SOL and ether, have experienced significant volatility in trading prices in recent periods and may continue to experience volatility in the future. Such volatility in digital asset prices could have a material adverse effect on the value of such Trust and its shares could lose all or substantially all of their value.

Digital assets represent a new and rapidly evolving industry. The value of each Trust depends, among other things, on the acceptance of the digital assets in general and bitcoin, ether or SOL in particular, the capabilities and development of blockchain technologies and the fundamental investment characteristics of bitcoin, ether or SOL, as applicable.

Digital asset networks are developed and maintained by a diverse set of contributors and the perception that certain contributors will no longer contribute to a network or may decrease their contributions to, or involvement with such network could have an adverse effect on the market price of the related digital asset.

Digital assets may have concentrated ownership and large sales or distributions by holders of digital assets could have an adverse effect on the market price of such digital asset.

As discussed in the relevant prospectus, MSSE and MSOL each expect to stake certain of their assets in accordance with their respective staking and liquidity policy and, therefore, may receive staking rewards.  Staking rewards can vary significantly over time. Staking activity comes with a risk of loss including, depending on the mechanics of a relevant blockchain, “slashing” penalties, which may be assessed if third party validators contracted to engage in staking activities on behalf of a Trust engage in misbehavior or perform poorly. There is no guarantee a Trust will recover any of its staked assets, or the value thereof, if they become subject to slashing penalties. In addition, activation and exit buffer periods may limit when assets become eligible to accrue staking rewards, when they may be unstaked, withdrawn and ultimately sold by the Trust in connection with redemption and creation orders and to pay for expenses. The length of these periods are monitored and considered as part of each Trust’s staking and liquidity policy, pursuant to which MSSE and MSOL expect to stake less than all of their respective digital assets which reduces the potential amount of staking rewards receivable by each Trust and by extension the value of their respective shares.

Staking introduces the risk of loss staked digital assets, which could adversely affect the value of a Trust’s shares if any such losses occur. Staking often includes activation, exit, and withdrawal periods, during which staked digital assets cannot be sold or transferred and are therefore illiquid. The Ethereum and Solana protocols limit validator activations and exits per epoch, so only a controlled amount of staked ether or SOL can turnover each epoch (in the case of the Ethereum protocol, the activation period may extend for days, weeks, or months depending on the demand queue). While queued for activation, while unbonding and during withdrawal periods, staked digital assets are generally not eligible to accrue staking rewards. At each step in the staking process, staked digital assets may be exposed to risks such as security breaches, smart contract vulnerabilities, and validator or custodian failure or compromise, any of which could result in a complete loss of the staked digital asset in question or associated staking rewards. There is no guarantee that a Trust will receive any staking rewards.

Neither MSBT, MSSE nor MSOL provide investors with direct exposure to spot bitcoin, ether or SOL, respectively, and investments in the Trusts are not a direct investment in bitcoin, ether or SOL. As non-diversified and single industry funds, the value of each Trust’s shares may fluctuate more than shares invested in a broader range of industries. Because the value of each Trust is correlated with the value of bitcoin, ether and SOL, respectively, it is important to understand the investment attributes of, and the market for, the underlying digital assets. Please consult with your financial professional.

A substantial direct investment in a digital asset may require expensive and sometimes complicated arrangements in connection with the acquisition, security and safekeeping of the digital asset and may involve the payment of substantial fees to third party service providers through cash payments of U.S. dollars.

Regulation of digital assets, including bitcoin, ether and SOL, continues to evolve across different jurisdictions worldwide, which may cause uncertainty and insecurity as to the legal and tax status of a given digital asset. As bitcoin, ether, SOL and other digital assets have grown in both popularity and market size, the U.S. Congress and a number of U.S. federal and state agencies have been examining the operations of digital asset networks, digital asset users and the digital asset spot market. Many of these state and federal agencies have brought enforcement actions and issued advisories and rules relating to digital asset markets. Ongoing and future regulatory actions with respect to digital assets generally or any single digital asset in particular may alter, perhaps to a materially adverse extent, the nature of an investment in a Trust.

The Delegated Sponsor does not store, hold, or maintain custody or control of any Trust’s digital assets, but instead has entered into Custodial Services Agreements with third parties to facilitate the security of its bitcoin, ether or SOL, respectively. The custodians control and secure the Trusts’ bitcoin, ether or SOL, in segregated custody accounts to store private keys, which allows for the transfer of ownership or control of the Trusts’ bitcoin, ether or SOL, on the respective Trust’s behalf. If a custodian resigns or is removed by the Delegated Sponsor or otherwise, without replacement, it could trigger early termination of a Trust.

COINDESK® and the name(s) of the CoinDesk index or indices referenced herein, including the CoinDesk 20 Index (“CDI Indices”) are trade or service marks of CoinDesk Indices, Inc. (with CC Data Limited, its affiliate which performs certain outsourced administration services on its behalf, “CDI”), and/or its licensors. CDI or CDI's licensors own all proprietary rights in CDI Indices. CDI is not the issuer, sponsor or producer of any financial product, derivative, portfolio, bundle, basket, separately managed account, or any other investment exposure that tracks, seeks to track, references, or settles against CDI Indices (collectively, “Products”) and CDI has no responsibilities, obligations, or duties to investors in or holders of Products. CDI Indices are licensed for use by the financial services provider named herein (“Provider”). CDI does not approve, endorse, review, or recommend any Product. CDI does not guarantee the timeliness, accurateness, or completeness of any data or information relating to CDI Indices and shall not be liable in any way to investors in or holders of any Product or other third parties in respect of the use or accuracy, completeness, or timeliness of any CDI Indices or any data included therein. CoinDesk Indices 2026.

Before making an investment decision in a Trust, you should carefully consider the risk factors and other information included such Trust’s prospectus.

Investors should be aware that investing in MSBT, MSSE and MSOL is not equivalent to investing directly in bitcoin, ether or SOL, as applicable.

Forward-Looking Statements
Certain statements contained herein and in any related materials may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can generally be identified by the use of words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "project," "seek," "should," "target," "will," "would," or similar expressions, or the negative of such terms. These statements are based on current expectations, estimates, assumptions, and projections and are subject to significant risks, uncertainties, and other factors that may cause actual results, performance, or developments to differ materially from those expressed or implied by such statements. Forward-looking statements speak only as of the date on which they are made. Each Trust undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required by applicable law.

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